PROB 1 BREAK EVEN POINT MULTIPLE PRODUCTS China Corporation produces two computer games, Ping and Pong. A
Question:
PROB 1 BREAK EVEN POINT MULTIPLE PRODUCTS
China Corporation produces two computer games, Ping and Pong. A contribution margin format
income statement for a recent month for the two games appears below:
Ping Pong Total
Sales 100,000 50,000 150,000
Variable Expenses 25,000 5,000 30,000
Contribution Margin 75,000 45,000 120,000
Fixed Expenses 90,000
Net Operating Income 30,000
Required:
1. Compute the weighted average contribution margin ratio
2. Compute the break-even point in terms of sales
3. Compute the break-even point in terms sales of Ping and Pong respectively
PROB 2 MARGIN OF SAFETY
Mama Corporation is a distributor of sun umbrella used at resort hotel. The data are as follows:
Selling Price 25 per unit
Variable Expenses 15 per unit
Fixed Expenses 8,500 per month
Unit sales 1,000 units per month
Required:
1. Compute the margin of safety in terms of units
2. Compute the margin of safety in terms of sales
PROB 3 OPERATING LEVERAGE
F Company installs home theater system. The company data are as follows:
Selling Price 120,000
Variable Expenses 84,000
Contribution Margin 36,000
Fixed Expenses 24,000
Net Income 12,000
Required:
1. Compute the degree of operating leverage
2. If there will be an increase of 10% in sales, estimate the impact in the net income.
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer